From 1st October 2012 the National Minimum Wage has increased and this could affect Umbrella Company Workers.
The new National minimum wage (NMW) limits are as follows:£6.19 - for workers aged 21 and over; Also;£4.98 - the 18-20 rate;£3.68 - the 16-17 rate for workers above school leaving age but under 18; and£2.65 - for apprentices under 19 or 19 or over and in the first year of their apprenticeship.
What does this mean for contractors working through an Umbrella Company?Basically for the majority of people there will be no change in their net take home pay. The only difference is the way their pay slip breaks down the elements of the pay. Umbrella Companies show on their payslips: Statutory pay (based on the NMW), holiday pay, expenses and commission/bonus. For most people the only change will therefore be a higher statutory wage and a lower commission/bonus with the total unchanged. For lower paid contractors or contractors with very high expenses (and no bonus/commission) the national minimum wage could marginally reduce their take home pay. This is because if all the income the contractor generates is used to pay the statutory pay and holiday pay then less may be reimbursed as expenses and hence more tax and national insurance is payable.